Avoiding Internet scams and accompanying ethical issues
Earlier this year, the Association of the Bar of the City of New York Committee on Professional Ethics addressed the rising rate of Internet scams aimed at lawyers and provided both practical advice and ethical guidance in Formal Opinion 2015-3. At issue was the ethical duties of lawyers who suspect or discover that they are targets of an Internet-based trust account scams.
The committee first discussed the ethical obligations to potential clients, explaining that: “Even before an attorney-client relationship has formed, an attorney owes certain duties to prospective clients, including the duty to preserve confidential information, see Rule 1.18(b). Those duties do not apply, however, to someone who is merely posing as a “prospective client” but whose purpose is to defraud the attorney … (but) an attorney must exercise diligence in investigating prospective clients before concluding that they are not genuine and thus not owed any ethical obligations.”
Steps lawyers should take to ensure due diligence in vetting the potential client may include “verifying the accuracy of the information provided by the email sender, such as names, addresses, telephone numbers, website addresses, and referral sources.” The committee emphasized the importance of protecting other clients’ funds in a trust account by taking reasonable steps to ensure that all deposited funds remain in the trust account until the bank confirms that the funds have been honored or collected, noting that the fact that a check has “cleared” is insufficient.
The committee then concluded that if, after exercising due diligence, an attorney concludes the sender’s goal is to defraud, the attorney may report the incident to the authorities and provide background information and supporting documentation.
The committee also provided a very valuable and useful list of “red flag” signs that may indicate that a potential client is, in fact, attempting to defraud you:
• The email sender is based abroad;
• The email sender does not provide a referral source. (If the email sender is asked how he found the firm, he may respond that it was through an online search. If prospective clients rarely approach the recipient attorney based on an Internet search, this should be an immediate red flag);
• The initial email does not identify the law firm or recipient attorney by name, instead using a salutation such as “Dear barrister/solicitor/counselor;”
• The email uses awkward phrasing or poor grammar, suggesting that is was written by someone with poor English or was converted into English via a translation tool;
• The email is sent to “undisclosed recipients,” suggesting that it is directed to multiple recipients. (Alternatively, the attorney recipient may be blind copied on the email);
• The email requests assistance on a legal matter in an area of law the recipient attorney does not practice;
• The email is vague in other respects, such as stating that the sender has a matter in the attorney’s “jurisdiction,” rather than specifying the jurisdiction itself;
• The email sender suggests that for this particular matter the attorney accept a contingency fee arrangement, even though that might not be customary for the attorney’s practice;
• The email sender is quick to sign a retainer agreement, without negotiating over the attorney’s fee (since the fee is illusory anyway);
• The email sender assures the attorney that the matter will resolve quickly;
• The counterparty, if there is one, will also likely respond quickly, settling the dispute or closing the deal with little or no negotiation;
• The email sender insists that his funds must be wired to a foreign bank account as soon as the check has cleared. (The sender often claims that there is an emergency requiring the immediate release of the funds); or
• The email sender or counterparty sends a supposed closing payment or settlement check within a few days. The check is typically a certified check or a cashier’s check, often from a bank located outside of the attorney’s jurisdiction.
Take this advice to heart, dear readers. Stay alert and take steps to ensure that you’re not the next lawyer victimized by an Internet scam.
Nicole Black is a Rochester, New York attorney and the Legal Technology Evangelist at MyCase, intuitive web-based law practice management software for the modern law firm. She is also the author of the ABA book Cloud Computing for Lawyers, co-authors the ABA book Social Media for Lawyers: the Next Frontier, and co-authors Criminal Law in New York, a West-Thomson treatise. She is the founder of lawtechTalk.com and speaks regularly at conferences regarding the intersection of law and technology. She publishes four legal blogs and can be reached at email@example.com.